This is my August 2018 FFJ Portfolio dividend income update. The portfolio was created in January 2017 for the purpose of demonstrating how investing in well managed companies with competitive advantages can assist investors in reaching their long-term financial goals without the need to speculate or to chase dividend yield.
August was a relative weak month from a dividend income perspective. The holdings in the core segment of the FFJ Portfolio generated CDN $~$530 and USD ~$1,050 bringing the YTD dividend income to CDN ~$9,465 and USD ~$9,954. The 'side' accounts generated CDN ~$827 and USD $0 bringing YTD dividend income to CDN ~$2,640 and USD ~$1,027; I didn’t start the 'side' accounts until mid-March.
With recently announced dividend increases from some of the holdings within the FFJ Portfolio (see here) and additions (see here, here, here, and here) to the FFJ Portfolio, I am revising my dividend targets for the year to CDN $19,000 and USD $20,000.
The market value of the core segment of the portfolio currently stands at CDN ~$371K and USD ~$768K. These values are CDN ~$55K and USD ~$166K higher than Book Value.
The 'side' accounts currently stand at CDN ~$296K and USD ~$233K. These values are CDN ~$38K and USD ~$6K higher than Book Value.
NOTE: I am not prepared to disclose RRSPs, TFSAs, and RESP details.
Even though the dividend income reported for the 'side' accounts only reflects a few months of dividend income, a full year's worth of dividend income from the holdings within the 'side' accounts would not move the needle to any great extent when calculating the overall dividend yield. It is clearly apparent I am not a 'yield chaser'.
I view valuations as somewhat rich (in general) and am finding it extremely difficult to identify attractively valued companies. I have several companies on my 'Watch' list and am awaiting a long overdue pullback so I can deploy funds sitting on the sidelines; I confess I am frustrated that we have not yet experienced a pullback of significance.
In order to overcome this frustration I continually remind myself that Warren Buffett says 'You don't have to swing at every pitch. The trick in investing is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot. If people are yelling, 'Swing, you bum!', ignore them.'
While I wait for the stocks on my 'Watch' list to retrace to reasonable valuations, I have begun to increase my usage of option strategies to generate additional cash flow.
Just prior to the release of SJM's Q1 results I wrote this article regarding my decision to write covered calls. That was followed up with this article.
The SJM trades generated USD ~$871 in positive cash flow. I have not reported this income on my FFJ Portfolio income update nor did I report the USD ~$1,145 in option income generated when I wrote covered calls on SJM in November 2017. If I decide to consistently use option trading strategies I will likely start to report option income/losses in my monthly reports but will not start doing this until January 2019.
Speaking of option strategies, I initiated a couple of additional option trades last week.
In this article I explained my rationale for buying a STZ January 2019 Call.
Late last week I wrote covered Calls on a portion of my MSFT holdings which generated USD ~$618. I like MSFT and have absolutely no intention of parting with my shares. If MSFT rises above my strike price prior to the November 2018 expiry, my intent is to close out that position and to write new calls expiring in a subsequent month.
That's my roundup for August. Here's hoping you made progress on your journey to financial freedom!
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